Economics (AS & A Level) · Oct / Nov 2025 · Paper 31 · Question 23

The diagram shows the aggregate demand, AD, and aggregate supply, AS, curves for an economy. The initial equilibrium is at point E. There is a revaluation of the exchange rate. If the Marshall-Lerner rule applies, which point on the diagram would show the new long-run equilibrium?

1. AA
2. BB
3. CC
4. DD

As printed in the paper